Trading Ideas

GBP/USD reaches resistance line
Fri, 24 May 2019 09:35:43 GMT
Source: Dukascopy Bank SA
 

On Friday morning the GBP/USD touched the upper trend line of the descending channel pattern of the hourly candle chart.

The event resulted in a decline, which needed to pass the support of an hourly simple moving average for the rate to drop once more to 1.2600.

Latest Fundamental Event

The British Pound traded sideways against the US Dollar, following the UK CPI data release on Wednesday at 08:30 GMT. The GBP/USD exchange currency rate lost 10 pips or 0.08% right after the release. The British Pound continued trading at the 1.2670 level against the Greenback.

Office for National Statistics released the UK CPI data, which came out worse-than-expected of 2.1% compared with forecast 2.2%.

According to the official release: "Rising energy prices and air fares, which were influenced by the timing of Easter, produced the largest upward contributions to change in the rate between March and April 2019. The largest, offsetting, downward contribution came from across a range of recreational and cultural items, which included computer games and package holidays."


Only US data left

The week will end with the US Durable Goods Orders and Core Durable Goods Orders on Friday at 12:30 GMT. This event has been rather non-eventful in the past half a year, as it has caused moves of only nine to 20.5 pips.

GBP/USD short-term review

On Friday morning the GBP/USD hit the resistance line of the descending channel pattern. This event started a decline, which resulted in the pair trading between the 55 and 100-hour simple moving averages.

It was expected that the rate will pass the support of the 55-hour simple moving average. In that case the GBP/USD would have no technical support as low as 1.2610, which should be slowly reached.

On the other hand, the pair could continue to trade sideways until the combined resistance of the 100-hour simple moving average and the upper trend line of the channel down pattern would push it down.

Hourly Chart


On the daily candle chart, the GBP/USD has broken the lower trend line of a descending channel pattern.

The rate continued the decline after the braking of the pattern.

Meanwhile, the rate has fallen fall below the daily simple moving averages, which is a clear signal that the rate has been oversold.

Daily chart

Traders are long on GBP/USD

Since Thursday, 72% of open GBP/USD position volume was in long positions on the Swiss Foreign Exchange.

Traders have been sitting on the recent surge and have the long positions in the green.

Meanwhile, trader set up pending orders in the 100-pip range were bearish, as 59% of orders were set to sell.

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